Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, mattress maker Select Comfort (Nasdaq: SCSS ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Select Comfort's business and see what CAPS investors are saying about the stock right now.
Select Comfort facts
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Headquarters (Founded)
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Minneapolis (1987)
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Market Cap
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$913.8 million
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Industry
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Home furnishing retail
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Trailing-12-Month Revenue
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$640.79 million
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Management
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CEO William McLaughlin (since 2000)
CFO James Raabe (since 1999)
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Return on Assets (Average, Past 3 Years)
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11%
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Cash/Debt
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$101.88 million / $600,000
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Year-to-Date Return
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80.1%
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Competitors
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Sealy (NYSE: ZZ )
Tempur Pedic International (NYSE: TPX )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 12% of the 2,955 members who have rated Select Comfort believe the stock will underperform the S&P 500 going forward. These bears include All-Stars chk999 and TSIF, both of whom are ranked in the top 0.1% of our community.
Just last week, chk999 touched on Select Comfort's extremely volatile nature: "High beta stock at the start of a market downturn."
In fact, Select Comfort sports a particularly lofty beta of 4.4. That's even higher than that of volatile furniture plays like Sealy (3.1), Tempur Pedic (1.9), and Furniture Brands (NYSE: FBN ) (2.8).
CAPS All-Star TSIF elaborates on the Select Comfort bear case:
It doesn't take much to impress investors on smaller company's that come out of the recession leaner and start posting profits, but you can only cut so much in the mattress business and keep your edge. The clone wars on mattresses continues and Bobopedics will continue to cut into the higher margin products. ... Select comfort did up their forecast for the year, which is good news, but at 12X book I don't believe this warrants a forward P/E of 16 . Finally, I believe the markets are toppy and those equities that short squeezed of late and reached artificial highs are going to have the biggest bounce back down.
What do you think about Select Comfort, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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